Deliver: Variable Data Printing

Digital printing is here to stay. Though that is no news flash, the applications of this fast-changing technology are affording marketers new opportunities to connect with customers and prospects.

Variable data printing, a form of digital printing, is a data-driven application that consistently delivers better results than traditional direct mail. According to a CAP Ventures study conducted in 2003, VDP can produce:

· 36 percent higher response rates.

· 25 percent higher average order values.

· 47 percent increases in repeat orders.

· 32 percent better overall revenue profit.

· 34 percent faster response time.

Producing a VDP mailing costs more than traditional long-run direct mail. Marketers have used VDP most effectively in back-end marketing and for customer retention.

VDP has its roots in the 1960s when credit card companies like Diner’s Club first sent statements printed on white computer paper in black ink. All credit card, banking, billing and other statements can be considered VDP. Each statement is unique with respect to the data being provided.

Recent developments in high-quality, four-color VDP have manufacturers and marketers abuzz with possibilities for truly unique one-to-one marketing campaigns. The ability to match personalized graphics with individual customer data lets marketers contact their customers on a very personal level. Here are three examples:

1. Banks reach their high-net-worth investors with quarterly reports complete with four-color pie charts, bar graphs and market summaries versus the individual customer’s portfolio.

2. Casinos have created loyalty programs consisting of incentives for customers who share personal data in exchange for complimentary dollars in and out of the casino, free rooms, meals and vacations. Data are personalized to show pictures of games the customer recently played, the shows and restaurants visited and premium services like spa treatments. Images change contingent upon the customer record, as does the message. Timeliness is achieved by mailing customer materials within a week of the last visit.

3. Real estate companies use VDP to generate color photos of individual agents along with pictures of the neighborhoods and, in some cases, even the houses up for sale.

Manufacturers, data service companies and customers gathered at a conference last fall to learn more about how to use VDP as well as how to avoid problems associated with an emerging technology. There was consensus that most customer-provided data were rife with errors and omissions and were generally just plain bad.

VDP providers need to offer a data cleansing service as part of their product offering since there are many workflow as well as manufacturing applications available. HP, Xerox, Kodak and Xeikon are among the major players on the manufacturing side.

Another topic of interest covered the relationship between marketers and VDP providers. Providers will be required to clearly indicate how creative and data files are to be prepared to maximize impact of a promotion while making it easy for all parties to work together as efficiently as possible. Many VDP providers prefer to offer creative services in conjunction with their printing and mailing capabilities and work closely with customers on both the front and back end.

Like every direct marketing business today, optimizing return on investment means all parties involved with a promotion have a vested interest in its success. Traditional print buyers are focused on cost per piece. Marketers are concerned with ROI. Therefore, most people at the conference thought that the approach to selling VDP would take place at the marketing level as opposed to the print buyer or purchasing manager level.

Other interesting notes from the show:

· The best VDP project does not have the customer/prospect’s name on it. Relevance and pertinence are the difference makers.

· Suspect data can be overcome by good copy (i.e., if the data files are not assured, the pitch can be more general in nature and less gender specific).

· Not being “scary” is very important. Reminding the customer of past purchases can be problematic if not done well and can turn off future sales.

· Marketers also can promote the “green” effect of VDP because fewer pieces need to be produced and mailed to garner the same overall response.

The average company loses 15 percent to 20 percent of its customers a year and 50 percent in five years, according to the CAP Ventures study. No company can afford to pass up any chance to increase lifetime value since acquiring and keeping a customer is the basis for successful direct marketing.

The machines used to produce VDP are not traditional offset printing presses, yet most observers are unable to discern the difference in the end product. Toner-based products and electrostatic inks both are used in producing digital printing. What is most important is that the result looks nearly identical to traditional offset printed material, and the method of printing is unimportant to 99 percent of people who see the product.

VDP is now a proven commodity, and its use as a customer relationship marketing tool is unparalleled. Traditional offset printers do not view VDP as a threat to their overall business simply because as quantities increase, the unit cost does not really decrease substantially. The output devices are not positioned to offer a declining CPM.

The inherent costs in VDP are in merging variable creative and variable data to produce a highly customized connection to the prospect or customer. High-speed large format web presses are built for speed and efficiency, and they do a great job of both. Expect the twain to begin to move together in the next five years, though it may be quite a few years before variable color images and data can be married to run at half the speed achieved by current multimillion-dollar printing presses.

But it will happen eventually, and while we wait for this rapidly developing application to mature there are a multitude of reasons why marketers should take a serious look at adding it to their media blend.

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